BES subholders look likely to lose it all, senior safe for now

By Nathan Collins
07 Aug 2014

Bailed out Portuguese lender Banco Espírito Santo’s subordinated creditors look likely to come away from its state rescue with little to none of their investment intact. Credit analysts predict that the balance sheet of the rump bank left after the state rescue indicates BES is unlikely to have sufficient assets to meet its obligations.

To add insult to injury, subordinated creditors that tried to hedge their investment with credit default swap contracts are unlikely to receive payments after the International Swaps and Derivatives Association ruled that no credit event had taken place at BES.

ISDA’s determination committee made that ruling on Wednesday, ...

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